February 2011

Metals Monitor

Activity Index reaches a new high as financing activity skyrockets

By
The staff of Metals Economics Group

The Metals Economics Group Pipeline Activity Index (PAI) rose for the fifth consecutive month in December, setting a new high-water mark for the 32-month
period since MEG initiated the PAI. The increase in the number of significant drill results and initial resource announcements in the latter half of the
year contributed to a steady rise in the PAI since July; however, the jump in the number of financings completed over the last few months of the year,
particularly in November and December as some juniors rushed to close financings before year-end, drove the PAI’s steep upward trajectory over the fourth
quarter.

The industry’s aggregate market capitalization for December also set a new high since MEG initiated the PAI, reaching almost $2.36 trillion — a far cry
from the low of $656 million in November 2008.

The number of significant drill results reported increased in November 2010, before slowing in December for the holiday season. North America continued to
be the main destination for gold explorers, while Latin America led the way in base metals for the second consecutive bimonthly period. Apart from a slow
December 2010, gold results virtually mirrored the relative gold price, while base metals results appear to have regained the momentum lost for most of
2009.

Initial resource announcements in the November-December period remained above the 2010 bimonthly average, but were still well below the levels seen prior
to mid-2009. The relatively low number of new initial resources is primarily the result of a continuing dearth in initial base metals resources. Given the
increase in earlier-stage drill activity observed since early 2010, especially for base metals since midyear, MEG expects the number of initial resource
announcements will eventually rise.

The overall value of initial resources reported in the latest period is down from September-October 2010. The largest new resource announced in the period
was for the Claude Hills deposit at Metals X’s Central Musgrave nickel laterite project in Australia, which straddles a tenement subject to a joint venture
agreement with Rio Tinto.

The number of significant financings completed by junior and intermediate companies continued to be the main driver of the PAI in November-December 2010.
The bimonthly total was 62 per cent above the previous high of $4.5 billion raised in November-December 2009, and the amount raised in December 2010 is
more than double the next highest month (November 2009 = $2.55 billion).

In 2010, a total of 66 qualifying IPOs (each for at least $2 million) raised a combined $1.5 billion, including 25 completed in November-December 2010 for
$721.2 million.

The MEG Pipeline Activity Index (PAI) measures the level and direction of overall activity in the supply pipeline, incorporating significant drill results,
initial resource announcements, project development milestones and significant financings into a single comparable index. The PAI is featured in the MEG
Industry Monitor, a series of comprehensive graphs and charts, with related commentary, illustrating MEG’s analysis of monthly changes and emerging trends
in the base and precious metals pipeline. Using information only available from MEG, the Industry Monitor tracks developments, based on announcements over
the past two years, of significant drill results, initial new resources, project development milestones, significant financings and acquisitions.

Metals Economics Group is a trusted source of global mining information and analysis, drawing on three decades of comprehensive information and analysis, with an unsurpassed level of experience and historical data.